What Do The Newly Added Risk Factors for 12 ReTech Indicate After Q1 Results?

12 ReTech Corp. (RETC) develops and markets software solutions for consumers and retailers. Its solutions include tools like 12Mirror (which identifies clothes tried by shoppers and captures downloadable images); 12Kiosk (which enables retrieving consumers as well as product information, order placement, and check out); 12Mobile (a social shopping mobile application); and 12Desktop (an e-commerce website). The company also operates retail stores at airport terminals and casinos.

Affected by the COVID-19 pandemic, which led to the closure of some of its stores, RETC posted revenue of $137.43 thousand during Q1 2021 as compared to $407.79 thousand in the year-ago period. Consequently, its gross profit fell to $42.35 thousand from $212.4 thousand during this period.

Despite this fall, RETC recorded a net gain of $10.45 million in Q1 2021 against a net loss of $10.56 million in the year-ago period. This was due to a gain of $11.07 million on derivative liability. (See 12 ReTech stock chart on TipRanks)

12 ReTech Risk Factors

According to the new Tipranks Risk Factors tool, RETC’s main risk category is Finance and Corporate, which accounts for 52% of the total 27 risks identified for the stock. The next two major risk factor contributors are Production and Tech & Innovation at 15% and 11%, respectively.

Since March, the company has added three new risk factors. First, RETC’s directors are also its board of directors and hence the board may have less degree of freedom in its functioning. Second, RETC’s CFO is also the CFO of another company and thus may not be able to devote full attention and time to RETC’s business operations. Third, RETC highlights that its base of customers is currently small, so it is dependent on a handful of customers for generating its current revenue.

Meanwhile, another key risk factor investors should be aware of is that RETC has outstanding preferred stock as well as convertible notes. If these instruments get converted into common shares, this would result in substantial ownership dilution for current investors in the company.

Compared to the sector average Finance & Corporate risk factor of 41.5%, RETC’s is at 51.9%, indicating owning the stock is riskier versus the broader sector. The shares of the company are up 100% over the past year.

Check out the Risk Word Cloud feature from our Risk factor tool, which highlights the most common risk factor phrases from RETC’s most recent filing, along with the most used phrases.

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